Climate Change Litigation 2.0

To date, climate change-related litigation, and the resulting economic and environmental impacts, has been a tort with no successful path for private litigation. In the early 2000s, there was a small number of climate change-related lawsuits filed in federal courts, all of which were dismissed based on procedural issues, primarily on the grounds that regulation of greenhouse gas emissions is not a function of the judicial branch.

Over the last several years, a new wave of climate change-related lawsuits has been filed in which plaintiffs are suing based on different legal theories and for different types of damages. By pleading these matters as product liability claims, plaintiffs hope to avoid the legal challenges that doomed the first round of litigation.

First Wave

The first series of climate change-related lawsuits were brought by private and public plaintiffs for a wide range of climate-related harms. These lawsuits primarily alleged causes of action based on public or private nuisance under federal and state common law, and sought expenses associated with climate change as well as declaratory relief regarding defendants’ obligations with respect to future damages.

There were four cases of note in this initial wave of litigation, all of which were litigated in federal courts.

•    Native Village of Kivalina v. ExxonMobil Corp., et al., was brought by Alaska Natives whose seaside village was imperiled by rising ocean levels, which plaintiffs claimed was the result of climate change caused by fossil fuels manufactured and sold by the oil industry defendants.

•     Comer v. Nationwide Mut. Ins. Co., et al., filed in a Mississippi federal district court, was brought by a proposed class of property owners along the Gulf Coast who alleged that climate change, caused at least in part by the oil company defendants, exacerbated the damaging effects of Hurricane Katrina.

•     In Connecticut v. American Elec. Power Co., Inc., (AEP), filed in the Southern District of New York, a number of state and other public actors sought to require defendants to abate their contributions to global warming. 

•    And, in State of California v. General Motors Corp., filed in the Northern District of California, the state of California sued several auto manufacturers for environmental harms resulting from emissions from defendants’ vehicles.

These four suits did not survive the initial pleading stage. All were dismissed on procedural grounds. The courts in the Kivalina, Comer, and AEP matters concluded that plaintiffs lacked standing to assert their claims, rejecting plaintiffs’ arguments that they need not establish causation with “scientific certainty,” at least at the pleading stage, so long as they could show that the defendants(s) “contributed” to the injury. Each of the courts also held that the lawsuits presented non-justiciable matters, as they would require the courts to engage in making policy determinations as to an acceptable level of greenhouse gas emissions, which was a function more properly left to the executive and legislative branches. 

While each of the cases was dismissed at the district court level, the appellate courts struggled with whether the matters should proceed. The U.S. Court of Appeals for the 9th Circuit affirmed the lower court’s dismissal of the Kivalina suit on standing and political questions grounds, but the Court of Appeals for the 5th Circuit initially ruled that the plaintiffs in Comer could proceed on their claims for private nuisance, trespass, and negligence as none of these claims presented non-judiciable political questions.

Similarly, the Court of Appeals for the 2nd Circuit, in AEP, reversed the district court’s dismissal, holding that the standing and political question issues did not preclude plaintiffs from pursuing their claims. Ultimately, though, the U.S. Supreme Court reversed the 2nd Circuit’s decision, holding in a unanimous opinion authored by the late Justice Ginsburg that plaintiffs could not proceed with their federal common law nuisance claims because Congress had expressly entrusted the EPA with the regulation of greenhouse gases, and, as such, it was improper for a court to engage in this role.

Climate Change Litigation 2.0

Although the Supreme Court’s decision in AEP effectively ended the first wave of climate change-related lawsuits, a new wave has since emerged. Plaintiffs in these actions have modeled their suits in the fashion of the multi-state tobacco litigation suits, and have focused more on state, rather than federal, common law in an effort to avoid the pitfalls that challenged the first wave of litigation.

These new climate change-related suits—which are currently pending in states such as California, Delaware, Hawaii, New Jersey, New York, Maryland, Minnesota, Rhode Island, South Carolina, and Vermont—are essentially pled as product liability cases. Plaintiffs often rely on previously confidential internal energy industry studies and research demonstrating that the energy industry was aware of the harms its products posed to the environment, and that defendants went to great measures to conceal this information from the public.

These suits typically allege causes of action found in product liability matters, such as strict liability for failure to warn of the dangers posed by the energy industry’s products; strict liability for design defects for placing a dangerous product into the stream of commerce; negligent liability for failure to warn; negligent liability for design defect; and violations of state consumer protection acts. And while a number of these suits also allege causes of action based on public nuisance or trespass, these counts are, again, typically pled as violations of state common law rather than federal common law.

As an example, in City of Charleston v. Brabham Oil Company, et al., the state of South Carolina and the city of Charleston filed suit against more than a dozen energy industry defendants, alleging causes of action for strict and negligent liability failure to warn on the theory that defendants knew or should have known that their products were harmful to the environment, but nevertheless continued to market their products without warnings. The suit also alleges violations of the South Carolina Unfair Trade Practices Act on the theory that defendants knowingly or recklessly ignored widely available information concerning the potential dangers associated with their products, failed to warn consumers about these dangers, and actively disseminated marketing materials casting doubt on the hazards of fossil fuel production and use. 

By framing these lawsuits as product liability claims, plaintiffs need not demonstrate that defendants initiated the causal chain leading to climate shifts that ultimately led to plaintiffs’ injuries. Rather, plaintiffs need only demonstrate that defendants created dangerous products that entered the marketplace, which then caused harm (for strict product liability claims); or that defendants failed to manufacture safe products or to provide a warning about the risks associated with products that caused harm (for negligent product liability claims).

What’s Next?

Most of the newer lawsuits remain tied up in procedural issues, most notably whether these cases can remain in state court or must proceed in federal court, and whether plaintiffs have jurisdiction over defendants for harms involving products sold outside of their respective states. In fact, one of these lawsuits, involving the city of Baltimore, is awaiting a decision by the U.S. Supreme Court on the question of removal, the case having been argued in January 2021. How the court rules on this question, and how courts rule on jurisdictional questions, will largely determine the viability of these cases.

The April 1, 2021, decision by the 2nd Circuit in City of New York v. Chevron Corp., et al., suggests that these suits may end up meeting the same fate as the initially filed suits. This suit did not allege causes of action based on a products theory, but instead alleged causes of action solely for public and private nuisance, and for trespass, based on New York common law. Affirming the lower court’s dismissal of the case, the 2nd Circuit reasoned that the city’s lawsuit touched on questions of federal common law rather than state law, and that the Clean Air Act displaced federal common law on questions of greenhouse gas emissions. 

 The decision in City of New York notwithstanding, even if plaintiffs in these cases can survive the initial pleadings, their lawsuits present unique questions of liability and damages. For example, is it proper to hold defendants accountable for climate-changing emissions that result from multiple industries, for emissions that were discharged throughout the globe rather than just in a single isolated geographic area, and for emissions that have occurred and accumulated for nearly a century? And, if so, how does a court determine one defendant’s liability relative to another’s, and how should damages be apportioned?

Perhaps the MTBE-related litigation, which also involved the environmental effects of the oil and gas industries’ products, may serve as a model for how these issues can be addressed. In In re Methyl Tertiary Butyl Ether (MTBE) Products Liability Litigation 591 F. Supp. 2d 259, 274 (2008), the U.S. District Court for the Southern District of New York was faced with the difficult question of allocating damages to defendant MTBE manufacturers. The court relied on a “commingling” theory to allocate damages, explaining that “when a plaintiff can prove that certain gaseous or liquid products (e.g., gasoline, liquid propane, alcohol) of many refiners and manufacturers were present in a completely commingled or blended state at the time and place that the harm or risk of harm occurred, and the commingled product caused plaintiff’s injury, each refiner or manufacturer is deemed to have caused the harm.”

Insurance Questions

Another aspect of the new wave of climate change-related litigation is whether these matters are eligible for insurance coverage. These suits raise numerous questions, such as whether defendants’ conduct qualifies as an “occurrence”; whether the harms caused by defendants’ products were expected or intended; whether these matters are subject to the pollution exclusion; whether the harms were ongoing or in progress at the time a particular insurance policy was issued; and whether coverage is available for liabilities associated with defendants’ products, particularly products put to their intended use.

The first wave of climate change-related litigation resulted in insurance coverage litigation that reached the Supreme Court of the Commonwealth of Virginia. In AES Corporation v. Steadfast Insurance Company, 283 Va. 609 (2012), the court considered coverage for the Kivalina lawsuit under commercial general liability insurance. The court concluded that the insurers had no coverage obligation for the underlying matter on the basis that the conduct described did not qualify as an “occurrence,” but did not rule on the potential application of the policy’s pollution exclusion. 

Climate change-related litigation is best characterized by uncertainty. Whether the alternative legal theories pled in the newer litigation will be sufficient to overcome the legal hurdles that doomed the first round of litigation remains uncertain. Even if the plaintiffs successfully navigate these threshold procedural questions, the plaintiffs still face significant challenges in terms of proving causation and damages against individual defendants. How these issues are resolved could potentially have profound implications for the legal system, the insurance industry, and the global economy as a whole